JOSEPH GIGLIO: Giannini’s miracle: How an immigrant helped save an American ideal

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By Joseph Giglio

The Enterprise, Brockton, MA

By Joseph Giglio

Posted Apr. 5, 2014 at 4:00 AM

By Joseph Giglio

Posted Apr. 5, 2014 at 4:00 AM

» Social News

COMMENTARY – At 5:12 on the morning of Wednesday, April 18, 1906, San Francisco was struck by a severe earthquake estimated at 7.8 on the Richter scale. The San Francisco quake devastated a great many of the city’s buildings and generated fires that burned for four days. By the time the fires were out, more than 80 percent of the city’s built-up area had been destroyed, more than 3,000 people lay dead and half of the city’s 400,000 residents were homeless. It was a catastrophe equal (in relative terms) to the five B-29 fire raids in 1945 that destroyed Tokyo, which had been the world’s third largest city.

As a result, the West Coast’s most important ocean shipping port and commercial center ceased to function. Or so it seemed.

But while the fires were still burning, Amadeo P. Giannini was aggressively seeking out his Bank of Italy’s small-business customers whose firms had been wiped out by the disaster, even though his bank’s storefront headquarters in the city’s North Beach section had also been devastated by the quake and fire. Giannini is surely one of the nation’s capitalist heroes, whose influence on the take charge actions by New York City’s J. P. Morgan during the Panic of 1907, is greater than most people realize. Yet his name is largely unknown to most Americans.

Working from a salvaged plank placed across two barrels in the middle of a North Beach street, Giannini helped each of his customers estimate how much it would cost to restart his business. He noted the amounts next to each business owner’s name in his black pocket notebook and told each one that the Bank of Italy was granting him a loan for the full amount, which he could begin drawing on the next morning.

Giannini’s gutsy entrepreneurial actions (which soon extended to small-business owners who had not previously been Bank of Italy customers) effectively shamed the leaders of San Francisco’s larger and more aristocratic banks to cease their paralyzed hand-wringing and get to work making increasing numbers of new loans to their own business customers.

The result was a massive expansion in San Francisco’s money supply. This free-flowing liquidity fueled a burst of new business activity. San Francisco’s homeless were hired to clear away the debris and virtually non-stop construction began on new buildings to house the city’s people and businesses.

By the opening of San Francisco’s Panama-Pacific International Exhibition (and world’s fair) in 1915, the city had been rebuilt and few signs remained of the 1906 disaster.

San Francisco’s quick-march reconstruction shows what intelligent management of a society’s money supply can accomplish when the chips are really down. Especially under the leadership of a savvy banker like that son of Italian immigrants who wasn’t afraid to roll his sleeves up and get to work and whose Bank of Italy grew into the modern giant (and recent recipient of a federal bailout) Bank of America.

Page 2 of 2 - Books on the history of organized crime often go out of their way to remind readers that the ultimate mental befuddlement of people like Chicago’s Al Capone and New Jersey’s Willie Moretti can be attributed to syphilis, a classic symbol of southern Europeans’ moral weakness and presumed inability to control their sexual desire. We can be forgiven for wondering if their mental deteriorations would be attributed, more politely, to Alzheimer’s disease or senile dementia had they not been of Italian descent.

As a nation, we continue to be imprisoned by foolish myths and enchantment tales about immigrants,” “foreigners,” and others, like Giannini, who lack the names and physical features of “good Americans.” In the process, we rob ourselves of their talents and drive, which we desperately need and which inevitably costs us – big time.

Joseph M. Giglio is a professor of strategic management at Northeastern University’s D’Amore-McKim School of Business.